Sunday, July 27, 2008

SACRAMENTO — It may be just a big head fake, another step in the Kabuki dance that Gov. Arnold Schwarzenegger says must play out before all sides come to agreement on how to solve the estimated $15.2 billion budget deficit.

But his threat to cut state workers' pay down to the federal minimum wage also signals that Schwarzenegger — to be forced out by term limits in 2010 — is beyond fears of voter retribution and is back to using a hammer to get his point across.

His threat reprised memories of his infamous "girlie men" dig at lawmakers for failing to get the budget done on time in 2004, and his failed attempt to bypass lawmakers with a spending cap ballot measure in 2005. It was in 2006, as he faced re-election, that Schwarzenegger showed his more conciliatory side — having learned the lesson that voters wanted results.

But if voter reaction has dropped off Schwarzenegger's radar, it's also not likely on the minds of lawmakers, who are protected by safely drawn districts and rarely face re-election concerns. It all adds up to low prospects for a budget deal any time soon, observers said.

"This is an unusual political situation," said Jack Pitney, government professor at Claremont McKenna College. "In most political conflicts, you have a number of players who have to worry about the next election. Because of term limits and (safely drawn) districts, that's less the case here."

There are few built-in Advertisementpolitical incentives to get a budget done, other than to avoid outright embarrassment — and expensive borrowing costs, experts said.

"The biggest problem is that everybody has a veto," said Alan Hoffenblum, co-editor of the California Target Book, which analyzes legislative races. "If Republicans don't like it, they say 'no.' If public employees don't like it, they say 'no.' It's an impossible situation because so many legislators are immune to public criticism," thanks to districts drawn to insulate incumbents.

So, Democrats, backed by voters in districts that approve of the most liberal options, rolled out a $10 billion tax increase on the wealthy earlier this month. And Republicans, from conservative districts that encourage resistance to any taxes, are happy to play the stubborn holdout. Their votes are needed, thanks to a constitutional requirement that two-thirds of the Legislature must vote for a budget.

If there was a law that forfeited all legislative pay — without the promise of getting any of it back — covering the time past the July 1 deadline to approve the budget, perhaps lawmakers would act quicker, said Larry Gerston, political science professor at San Jose State.

"As long as there's a cash supply — enough to last until late August — there's little motivation," Gerston said. It doesn't help that gerrymandered districts and term limits "work to discourage quick action."

Still, some are hopeful that this game of chicken — which could last late into the summer, or longer — could ultimately lead to reforms that would make budgeting less subject to the whims of unyielding politicians.

Schwarzenegger could get a breakthrough on his plan to create a spending cap, for example, if he agrees with Democrats to avoid painful cuts in education and social services — and raise taxes to fill the $15.2 billion budget hole.

Republicans appear adamantly opposed to the Democrats' $10 billion tax plan, saying it would strangle an already ailing economy and is unfairly weighted to one class of taxpayers. But, they could be open to a broader sales tax: a drop, by a quarter cent, in the sales tax, but with a broader application to more goods and services.

Democrats have resisted Schwarzenegger's plan to create a spending cap on future budgets — along with a reserve to cushion future revenue shortfalls — but could accept a specific cap for unusual flush times, observers said.

"We're at a place where it's a matter of everybody finding cover," Gerston said. "Everybody has to swallow their bitter medicine so that everybody can take credit."

The longer legislators hold out — and the more polarizing the demands get — the more hope the Proposition 11 campaign has for passing its measure to reform how legislative districts are drawn.

"This is a prime example of why redistricting is so important," said Jeannine English, co-chairwoman of the Prop. 11 campaign and legislative director for AARP. "We're not cheering this, but what we've seen time and time again, either with health care reform or the budget, that long-term solutions are not addressed."